The latest development in the Spokane area affordable housing market involves a blend of land, community and trust.
In June, Ericka Taylor, project coordinator for the recently launched Spokane Community Land Trust, provided an overview of the program at a meeting of the Liberty Lake City Council, joined by two representatives from the CLT board of directors. Taylor introduced the approach as “a strategy for permanently affordable housing” and described how the local effort would provide an encouraging avenue for seniors, single parents and young families who are looking to purchase homes, regardless of the volatility of the market.
Utilized widely in urban areas across the U.S., Community Land Trusts function as nonprofit organizations, purchasing and managing acreage where homes currently stand or can be built. The division of land from the home keeps the cost low, provides residents with an opportunity to move from renting to ownership and prevents rampant foreclosure rates.
As an illustration of how the program works, Chris Venne, a Spokane CLT board member who works for Community Frameworks, a local agency specializing in affordable housing projects such as Appleway Court and Dishman Commons in Spokane Valley, pointed to an example of a home with an estimated value of $150,000. To purchase the home, the buyers would need to have an annual income of just under $40,000 – or around 65 percent of the area median income – to qualify. Mortgage payments would be in the neighborhood of $990 a month.
After taking away the cost of the land – approximately $40,000 – the same home would be priced at $110,000, meaning a buyer could qualify by earning $30,000 a year, or 52 percent of the area median income. Monthly payments on the house would be $735 along with a $50-a-month land lease payable to the CLT.
“It’s about having confidence in the affordability of homes,” Venne said. “It’s a huge difference.”
While Venne is quick to acknowledge that the housing market “is what it is” and says that, at least initially, “the CLT won’t bring in hundreds of buyers,” he refers to a recent study that tracked CLT homebuyers over a 20-year period. In that time, nearly 90 percent went on to mainstream homeownership after living in a CLT home. Another 7 percent remained in CLT properties while just over 3 percent returned to the rental market.
Meanwhile foreclosure rates on CLT homes check in at around one-sixth of the national average, according to research by the Federal Reserve.
When it comes to maintaining affordability of CLT homes, the program typically operates on a ceiling appreciation of 25 percent for those looking to sell. In other words, a home priced at $150,000 when first purchased that rises in market value to $200,000 could only be sold for $162,500 – or an increase of $12,500 (25 percent) of the overall $50,000 gain.
Discussions about forming a local CLT began about a year-and-a-half ago, Venne said. The board – which consists of bankers, realtors and representatives from nonprofit agencies like Community Frameworks – first met last May. The CLT office, housed in the same building on Mission Avenue in downtown Spokane as Community Frameworks, officially opened this April.
Ken Garceau of the Spokane Association of Realtors has been speaking up about the need to generate affordable housing for years. In 1986, he organized a symposium in Spokane on the subject. Now, as a CLT board member, Garceau is hoping the real estate and development community steps up to support the new program. The CLT will rely on grants and donations of land as it builds momentum.
“I believe everyone should have the opportunity to own a home,” Garceau said. “We have to be able to provide opportunities for first-time homebuyers who are a little less fortunate.”
Taylor, who has introduced the program at City Council meetings in Cheney, Liberty Lake and Deer Park, said she hopes to continue getting the word out to local governments, civic groups and churches.
“There’s a lot of outreach involved so that when a project starts, there will be a basis of understanding,” Taylor said.
While a Community Frameworks townhome project called Valleypointe on Appleway Road in Spokane Valley has struggled to draw buyers since breaking ground two years ago, Taylor expressed confidence that the CLT would generate interest comparable to the local branch of Habitat for Humanity.
“I don’t see it being much of an issue,” Taylor said.
On the money side, the CLT offers benefits such as tax breaks and points through the Community Reinvestment Act, a federally based program launched in 1977 that encourages banks to provide borrowing opportunities to all segments of the community, including low to moderate income households.
John Fisher, another employee of Community Frameworks who serves on the CLT board, said early response to the program has been positive.
“Right now we’re getting the word out to potential buyers and those who could potentially donate land,” Fisher said. “I think it’s a great example of a for-profit/nonprofit collaboration.”
Want to find out more?
To learn more about Spokane Community Land Trust, contact Ericka Taylor at firstname.lastname@example.org or 279-2351 or call Chris Venne at 484-6733.